By Halia Pavliva Oct. 20 (Bloomberg) -- Platinum and palladium gained as the outlook for a weaker dollar boosted demand for alternative assets as a hedge against a decline in the currency’s value. The greenback fell as much as 0.2 percent against the euro before rebounding, while the U.S. Dollar Index touched a 14- month low before erasing the loss. Some investors buy precious metals to preserve value when the dollar weakens. “It will be the dollar that will be the most closely watched,” Edward Meir, an MF Global Ltd. analyst in Darien, Connecticut, said in a report. Platinum futures for January delivery rose $10.90, or 0.8 percent, to $1,375.10 an ounce at 10:01 a.m. on the New York Mercantile Exchange. Before today, the most-active contract climbed 45 percent this year, while the dollar slid 6.6 percent against the euro. “The main driver fueling the run in commodities for much of the last week has been the weaker dollar, now hurtling towards the psychologically important $1.50 mark against the euro,” Meir said in the note. The euro closed at $1.4965 yesterday. Palladium futures for December delivery gained $5.60, or 1.7 percent, to $340 an ounce in New York. Through yesterday, the price jumped 77 percent this year. “Should the key $1.50 level break, expect to see a greater degree of reaction by the Europeans,” who are concerned that the euro’s rising value could slow economic recovery, Meir said. He said the dollar’s momentum will remain unchecked by central- bank intervention, “at least for a little while longer.” Platinum and palladium are mostly used in jewelry and pollution-control devices in cars.

Source